CASE 2 Adjusting Entries
Due Date: Tuesday March 31, 2015
Please hand in one hard copy per group at the beginning of the class session.
Submission of this assignment is made under the terms of our academic integrity code.
Each adjustment is worth 3 points. There is no partial credit for individual entries. The summary table at the end is worth 8 points. The case is worth 50 points.
You are presented with the following information for Little Co. Consider all situations independently. The company has a 12/31 year end and each item should be considered as a possible adjusting entry. …show more content…
A7: The company has a balance in Notes Receivable of $15,000. The note is due in 3 years and carries a 6% interest rate. Interest is paid on the note each January. Interest has been correctly accrued through September 30.
A8: The company has recorded depreciation expense through September 30. Data on the company’s PP&E is as follows:
Type Cost Useful Life Salvage Value Accumulated Depreciation
Land $50,000 NMF
Buildings $500,000 20 years $50,000 $125,000
Equipment $80,000 5 years $5, 000 $ 25,000
Furniture and Fixtures $30,000 3 years $3,000 $ 20,000 Record the entry for depreciation expense at year end using one compound entry.
A9: Limited life Intangible assets of $40,000 are listed the unadjusted trial balance. These are being amortized at the rate of $10,000 per year. Amortization has been recorded through the quarter ended September 30.
A10: When analyzing Accounts Payable you discover invoices for inventory items that have been received and billed to you but have not yet been recorded in the amount of $6,000.
A11: Salaries earned but not yet paid on December 31 were